Hafidz Bhd produces jewellery on various scales. One the jewellery that it produces is called Red Ruby. The production of Red Ruby consists of two processes. The following information was provided on its production for March 2021. Process 1 Process 2 Direct Labour 350 hours 320 hours Normal loss 8% of input 10% input Output 120 kg 140 kg (a) Direct materials for each process are as follows: Process 1 Silver 50 kg @ RM35/kg Steel 100 kg @ RM12/kg Process 2 Red ruby 30 kg @ RM85/kg Additional RM800 (b) Labours for process 1 and process 2 were paid RM6 and RM8 per hours respectively. Overhead incurred is RM16,750 and was absorbed in both processes based on direct labour hours. (c) The scraps from process 1 can be sold at RM5 per kg and scraps from process 2 has no value. (d) Direct expenses of RM2,000 was incurred in process 1. Required: Process 1 and Process 2 accounts.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Hafidz Bhd produces jewellery on various scales. One the jewellery that
it produces is called Red Ruby. The production of Red Ruby consists of
two processes. The following information was provided on its production
for March 2021.
Process 1 Process 2
Direct Labour 350 hours 320 hours
Normal loss 8% of input 10% input
Output 120 kg 140 kg
(a) Direct materials for each process are as follows:
Process 1 Silver 50 kg @ RM35/kg
Steel 100 kg @ RM12/kg
Process 2 Red ruby 30 kg @ RM85/kg
Additional RM800
(b) Labours for process 1 and process 2 were paid RM6 and RM8 per
hours respectively. Overhead incurred is RM16,750 and was
absorbed in both processes based on direct labour hours.
(c) The scraps from process 1 can be sold at RM5 per kg and scraps
from process 2 has no value.
(d) Direct expenses of RM2,000 was incurred in process 1.
Required:
Process 1 and Process 2 accounts.
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